Chelsea have moved to the head of the queue of clubs pursuing Theo Walcott, Goal.com understands, but the European champions want to wait until next summer to sign the contract rebel on a free transfer.

The Blues have made clear their interest in the England international, who is believed to favour staying in London ahead of a move to the North West or the Continent.

Liverpool, the two Manchester clubs and Juventus are all on Walcott's trail but they all fall short in one notable area.

"Location is key for Theo," said one source well acquainted with the 23-year-old's situation. "He is settled in the South East and would prefer to stay there."

Walcott's contract stand-off with Arsenal will now drag on into the New Year even though Arsene Wenger had issued a Christmas deadline to finalise the issue.

Discussions with the forward, which collapsed at the end of August, are continuing and senior officials have still not given up hope that he will sign a new deal.

Walcott would rather stay at Arsenal if they meet his demands of between £90,000- and £100,000-a-week wages and give him more opportunities to play in the centre-forward role that he craves.

The Gunners are aware that the player holds the greater power in talks, as his availability for nothing at the end of the season means that he could negotiate an enhanced signing-on fee and salary with new employers.

There is a fear at the top of the club that Walcott will "do a Mathieu Flamini" and follow in the footsteps of the Frenchman four years ago by leaving on a Bosman. This would deprive Arsenal of a potential January transfer fee of nearly £10 million for a player signed from Southampton in 2006 when he was 16.

LIVERPOOL ALLAY FEARS ABOUT STURRIDGE ATTITUDE

Daniel Sturridge moved a step closer to a January move to Liverpool at the start of last week as Brendan Rodgers stepped up his interest in a player who has slipped down the Stamford Bridge pecking order following the summer arrivals of Oscar, Eden Hazard and Marko Marin.

The Reds boss held off from signing Sturridge in the last week of the August window due to doubts about the England international's attitude.

"Those fears have now been allayed," an Anfield source told Goal.com.

Sturridge, who travelled with Chelsea to the Club World Cup but was an unused substitute in both matches, has suffered from a series of niggling injuries this season but his tally of two starts in all competitions is an unsatisfying one for a player who scored 11 league goals in 2011-12.

Rodgers wants the versatile attacker to share centre-forward duties with Luis Suarez in a fluid attacking system in which the pair will interchange positions.

Chelsea fans may have thought that they had seen the last of Yossi Benayoun once he joined West Ham on loan on the final day of the summer transfer window.

But the Israeli midfielder could yet return to Stamford Bridge in January, with West Ham understood to be in two minds as to whether to keep him beyond his initial loan spell as he struggles with injury.

Benayoun is currently recovering from a knee injury at Chelsea's Cobham training ground and the Blues have a recall option in the New Year for a player who has been restricted to just six appearances this season.

The Blues are already covering a significant portion of the midfielder's £90,000-a-week wages and manager Rafa Benitez is a known fan, having signed the player for Liverpool in 2007.

The Spanish boss has spoken of his concern that the Chelsea squad may be too small and will assess Benayoun before deciding whether the 32-year-old could be worth including in his plans for the second half of the campaign.